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Blababa [14]
3 years ago
11

Company X currently has a capital structure that consists of 40% equity, 20% preferred equity, and 40% of debt. The risk-free ra

te is 3% and the market risk premium is 8%. The company's equity beta is 1.1. The dividend yield for the preferred equity is 6%. The corporate tax rate is 21%, and the cost of borrowing for company X is 5%. What is the WACC for company X
Business
1 answer:
Sindrei [870]3 years ago
8 0

Answer:

14.58%

Explanation:

WACC = weight of equity x cost of equity + weight of debt x cost of debt x (1 - tax rate) + weight of preferred equity x dividend yield

According to the capital asset price model: Expected rate of return = risk free + beta x (market rate of return - risk free rate of return)

r= 3% + 1.1 x 8 = 11.8

equity = 0.4 x 11.8% = 4.72

d = 0.4 x 5 x (1 -0.21) = 1.58

p = 0.2 x 6 =  1.2

11.8 + 1.58 + 1.2 =

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PLS HELP!! Complete the following sentence.<br> Making sales is the primary mission of a sales___
Doss [256]

Answer:

Salesman

Explanation:

A Salesman, also called a Sales Representative or Salesperson, sells products or services to businesses or consumers. - JH

4 0
3 years ago
Read 2 more answers
Suppose that the level of GDP increased by $100 billion in a private closed economy where the marginal propensity to consume is
____ [38]

Answer:

$50 billion

Explanation:

To find the change in aggregate expenditures, we need to find the change in consumption. For this, we will use the marginal propensity to consume formula:

MPC = ΔC/ΔY

Where:

MPC = Marginal propensity to consume

ΔC = Change in consumption

ΔY = Change in output (GDP)

We know that out MPC is 0.5, and our ΔY is $billion. We plug these amounts into the formula:

0.5 = ΔC / 100 billion

And we rearrange the equation to solve for ΔC

ΔC = $ 100 billion x 0.5

ΔC = $50 billion

So the change in consumption is $50 billion, which is also the change in aggregate expenditure.

3 0
3 years ago
Which of the following is part of a sustainable economy? ANSWER a) Unselected It will value and preserve ecosystem services and
elena-14-01-66 [18.8K]

Answer:

Letter e is correct. All of the listed responses are parts of a sustainable economy.

Explanation:

In a sustainable economy, people are much more aware of the preservation of nature's depleted resources, and the well-being of current and future generations, which induces companies to meet the demands of new conscious consumers by creating " green products "and the use of new technologies to reduce the negative impacts of production on the environment.

8 0
3 years ago
In Marubeni America Corp. v. United States, the federal appellate court ruled that the Nissan Pathfinder was, for tariff classif
Hitman42 [59]

Answer: the tariffs will vary depending on the classification.

Explanation:

Tariff is a form of tax that is usually imposed on the imports that are brought from other countries to a particular country.

With regards to information provided in the question, the classification of goods is significant because the tariffs will vary depending on the classification.

6 0
3 years ago
On September 30, 2021, Bricker Enterprises purchased a machine for $200,000. The estimated service life is 10 years with a $20,0
vagabundo [1.1K]

Answer:

$38,000

Explanation:

Double-declining-balance method used its ratio by computing depreciation expense. By multiplying it against original cost. To get ratio we simply divide 100% over the life of an asset times 2.

100% / 10 years x 2 = 20%

First, we will compute the 2021 depreciation for us to know our base amount on year 2022.

$200,000 x 20% = $40,000 x3/12 = $10,000

we prorate the annual depreciation expense because part of it is applicable to 2021 and 2022.

For year 2022, we have two ways to compute.

First:

$200,000 x 20% = $40,000 x 9/12 = $30,000 (the portion of the first year’s depreciation that’s for January 1, 2022 to September 30,2022), plus

$200,000 - $40,000 = $160,000 (year 2 net book value)

$160,000 x 20% = 32,000 x 3/12 = $8,000 (portion of second year’s depreciation that for October 01, 2022 to December 31, 2022)

Or second, an alternative way to compute,

2021

$200,000 x 20% = $40,000 x 3/12=$10,000

2022

$200,000 - $10,000 = $190,000 (Net book value)

$190,000 x 20% = $38,000

*Residual value is ignored in computing depreciation expense under double-declining-balance method.

7 0
3 years ago
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